Jobless claims fall; monthly average at 5-year low

Initial jobless claims fell by 7,000 last week to a seasonally adjusted 340,000.

The number of American workers filing for unemployment benefits unexpectedly fell last week, marking further job market improvement. The four-week moving average dropped to its lowest level since early 2008.

In the week ended March 2, initial jobless claims fell by 7,000 to a seasonally adjusted 340,000, the Department of Labor said Thursday. Economists were expecting a rise to 355,000.

“The trend in the data appears to be improving somewhat despite the fiscal tightening through tax increases implemented at the start of the year,” said Daniel Silver, economist with J.P.Morgan, in a research note Thursday.

The four-week moving average, usually much preferred by economists as it smooths out weekly volatility, also dropped by 7,000 to a five-year-low of 348,750.

In the depths of the financial crisis, initial claims topped 650,000 in 2009. It has been cooling down since early 2011. Except for a spike in connection with Hurricane Sandy, the number stayed mostly under 400,000 last year, a level generally considered by economists to suggest a strengthening labor market.

Thursday’s upbeat news came just one day ahead of the February unemployment report.

Economists project that 160,000 net jobs were added last month and some expect this would help drag the unemployment rate down to 7.8 percent. The rate in January was 7.9 percent.

Despite Thursday’s numbers, fears remain that sequester cuts could take 750,000 jobs out of the economy.

Diane Swonk, chief economist with Mesirow Financial, expect the effects from the series of federal spending cuts to show later in the year. She added in a Wednesday blog that the first mandatory unpaid leave would hit for civilian government employees on April 1.

“These cuts could shave up to 80,000 jobs per month from employment after February, which would change 2013 from a turning point to a ‘more of the same’ type of year for the labor market,” Swonk said.